No. 95-133
IN THE SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1995
CHESLEY T. MEARS, ET AL., PETITONERS
v.
FEDERAL DEPOSIT INSURANCE CORPORATION,
AS LIQUIDATING AGENT/RECEIVER OF
OLYMPIC INTERNATIONAL BANK AND TRUST
ON PETITION FOR A WRIT OF CERTIORARI
TO THE APPEALS COURT OF MASSACHUSETTS
BRIEF FOR THE RESPONDENT IN OPPOSITION
WILLIAM F. KROENER, III
General Counsel
JACK D. SMITH
Deputy General Counsel
ANN S. DUROSS
Assistant General Counsel
RICHARD J. OSTERMAN
E. WHITNEY DRAKE
Counsel
Federal Deposit Insurance
Corporation
Washington, D.C. 20429
DREW S. DAYS, III
Solicitor General
Department of Justice
Washington, D.C. 20530
(202)514-2217
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QUESTION PRESENTED
Whether title to property currently held by the
FDIC as receiver of a failed bank is subject to claims
by petitioners, where petitioners took no action to
enforce their alleged rights for a period of more than
48 years.
(I)
TABLE OF CONTENTS
Opinions below . . . . 1
Jurisdiction . . . . 1
Statement . . . . 2
Argument . . . . 6
Conclusion . . . . 12
TABLE OF AUTHORITIES
Cases:
Christian v. Mooney, 511N. E.2d 587( Mass.1987),
cert. denied, 484 U.S. 1053(1988) . . . . 10
Guaranty Mortgage Corp. v. Town of Burlington,
432 N.E.2d 480 (Mass. 1982) . . . . 9
Lamontagne v. Knightly, 572 N.E.2d 1375 (Mass.
App. Ct. 1991) . . . . 10
Mennonite Board of Missions v. Adams, 462 U.S.
791 (1983) . . . . 6, 7, 8
Saranac Land & Timber Co. v. Comptroller of
New York, 177 U.S. 318 (1900) . . . . 10
Texaco, Inc. v. Short, 454 U.S. 516 (1982 ) . . . . 11
Constitution and statutes:
U.S. Const. Amend. XIV (Due Process Clause) . . . . 6
Mass. Gen. L.:
Ch. 60:
16 (1936) . . . . 5
53 (1936) . . . . 3
79 (1941) . . . . 3,4,5, 6, 9, 10
80 (1941) . . . . 4,5.
80C (1986) . . . . 4, 5,6, 10,11
Ch. 240,1 (1986) . . . . 4
(III)
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In the Supreme Court of the United States
OCTOBER TERM, 1995
No. 95-133
CHESLEY T. MEARS, ET AL., PETITIONERS
v.
FEDERAL DEPOSIT INSURANCE CORPORATION,
AS LIQUIDATING AGENT/RECEIVER OF
OLYMPIC INTERNATIONAL BANK AND TRUST
ON PETITION FOR A WRIT OF CERTIORARI
TO THE APPEALS COURT OF MASSACHUSETTS
BRIEF FOR THE RESPONDENT IN OPPOSITION
OPINIONS BELOW
The notice denying further appellate review by the
Supreme Judicial Court of Massachusetts (Pet. App.
Al) is unpublished, but the decision is noted at 648
N.E.2d 1285 (Table). The opinion of the Massachu-
setts Appeals Court (Pet. App. A2-A12) is also un-
published, but the decision is noted at 646 N.E.2d 1097
(Table). The order and judgment of the Massachu-
setts Land Court (Pet. App. A13-A18) is unreported.
JURISDICTION
The judgment of the Massachusetts Appeals Court
was entered on March 3, 1995. The Supreme Judicial
(1)
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2
Court of Massachusetts denied further appellate re-
view of the Appeals Court decision on April 24, 1995.
The petition for a writ of certiorari was filed on July
24, 1995 (a Monday). The jurisdiction of this Court is
invoked under 28 U.S.C. 1257.
STATEMENT
1. Charles W. Mears died in 1933. He was the
owner of a 28-acre parcel of land (the property) situ-
ated in the town of Hamilton, Massachusetts. Pet.
App. A2. Upon his death, title to the property passed
to his wife, his son, and his daughter (the devisees) in
equal shares by testamentary devise under the re-
siduary clause of his will. Id. at A3-A4 The will
of Charles W. Mears was approved for probate on
October 13, 1933. Pet. 4. The petitioners, the heirs at
law of the devisees, i bid., trace their asserted title to
the property to this 1933 testamentary devise.
2. Respondent, the Federal Deposit Insurance
Corporation (FDIC), as Liquidating Agent/Receiver
of Olympic International Bank and Trust Company
(Bank), succeeded to the interest of the Bank as
mortgagee of the property after the Bank failed in
June, 1992. In 1988, the Bank had made a loan which
was secured by a mortgage on the property. When the
mortgagor defaulted on the loan, the Rank accepted
a deed to the property in lieu of foreclosure of the
mortgage. The Bank subsequently deeded the prop-
erty to its wholly owned subsidiary, the Fort Hill
Corporation, which was dissolved by the FDIC in 1993
after the Bank closed. At that point, title to the
property reverted to the FDIC as receiver of the
Bank.
The mortgagor's title to the property was derived
from a series of conveyances beginning with a Treas-
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3
urer's Deed to the Town of Hamilton, dated November
29, 1941. The FDIC'S title to the property ultimately
derives from that Treasurer's Deed.
3. In 1935, after the death of Charles W. Mears, the
Town of Hamilton assessed a real estate tax of $40.04,
for tax year 1935, against the immediate heirs of
Charles W. Mears (the devisees). Pet. App. A3. The
tax was not paid. The town made demand for payment
of taxes due upon "Charles W. Mears (heirs)" in April,
1936. Ibid. When no payment was made, the town
gave notice of its intention to take the property by
publication in the Salem Evening News on July 15,
1936, and by posting notices at the town hall and local
post office, all in conformity with the statutes then
applicable. Ibid. 1 When no response was received,
the Town took the property for nonpayment of taxes
and recorded an instrument of taking in the Essex
County Registry of Deeds, dated July 30, 1936. Id. at
A4. 4. On or about October 7, 1941, the commissioner of
corporations and taxation for the Commonwealth of
Massachusetts executed an affidavit, duly recorded,
certifying that the property was of low value and
insufficient to satisfy the tax, interest and charges
due. Pet. App. 4A.2 On or about November 29, 1941,
after having offered the property at public auction, 3
the Town acquired the property by Treasurer's
___________________(footnotes)
1 See Mass. Gen. L. ch. 60, 53 (1936) (Pet. App. A27).
2 See Mass. Gen. L. ch. 60, 79 (1941) (Pet. App. A34-A35).
3 Section 79 required public notice of the auction "by
posting a notice of the sale in some convenient and public place
in the town fourteen days at least before the sale." Pet. App.
A35.
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4
Deed, 4 and on December 2, 1941, the deed was recorded
in the Essex County Registry of Deeds. Ibid.
5. On April 10, 1990, petitioners commenced this
action in the Massachusetts Land Court against the
Fort Hill Corporation (the Bank's subsidiary), the
owner of the property at the time, to determine title
to the property arid to establish an appurtenant
easement. Pet. App. A5, A19-A20. The action was
brought pursuant to an Order of the Land Court to
Try Title, dated February 12, 1990 (see Mass. Gen. L.
ch. 240, 1 (1986)). Pet. App. A19-A20. The parties
filed cross-motions for summary judgment. Petition-
ers asserted in their motion for summary judgment
that the town of Hamilton had failed both "to exercise
reasonable diligence in identifying interested par-
ties" and "to give constitutionally adequate notice of
the low value tax taking which gave rise to the 1941
[Treasurer's] Deed, in comportment with due process
of law." Id. at A21. Thus, petitioners argued that the
tax title was void ab initio, rendering defective all
subsequent conveyances deriving from the Treasur-
er's Deed of 1941. Ibid.
6. After a hearing, the Land Court rejected
petitioners' arguments, concluding that the town's
demand for payment of taxes was sufficient to give
notice of the ensuing tax taking and that the town had
complied with all procedural requirements then in
effect for the sale of low value land under Sections 79
and 80 of chapter 60 of the General Laws of Massachu-
setts (1941). The Land Court also ruled that petition-
ers' claim, insofar as it was predicated cm an alleged
deficiency in notice prior to the taking, was barred by
operation of Section 80C of chapter 60 of the General
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4 See Mass. Gen. L. ch. 60, 80 (1941) (Pet. App. A36).
5
Laws of Massachusetts (1986). Section 80C, enacted
in 1986, provides that a duly recorded conveyance of
land by a city or town pursuant to Section 79 or 80
shall not be "subject to any * * *. defects,
irregularities, or omissions" with respect to the
"notice or procedure for the taking and sale or con-
veyance," if a period of 20 years has elapsed since the
conveyance or sale was recorded and no proceeding
has been commenced "on account of such defect,
irregularity, or omission'' during that time. Pet. App.
A37.5 The Land Court therefore declared that the
FDIC is the present legal title owner of the property
and granted summary judgment for respondent. Id. at
A18. 7. The Massachusetts Appeals Court affirmed.
Pet. App. A2-A12. The Appeals Court made three
findings. First, it found that the record clearly estab-
lished the fact that the tax collector in the Town of
Hamilton had served a legally sufficient demand for
payment of taxes due on the heirs of Charles W.
Mears in 1936, before the property was taken for
nonpayment. Id. at A6-A10.6 Based on that fact, the
___________________(footnotes)
5 Nothing in the record shows an intervening challenge to
the Treasurer's Deed to the Town of Hamilton from Decem-
ber, 1941, until the filing of the Land Court action in April,
1990.
6 Section 16 of chapter 60 of the General Laws of Massa-
chusetts (1936), as written at the time, provided in pertinent
part (Pet. App. A26):
The collector shall, before selling the land of a resident, or
non-resident, * * * serve on him a statement of the
amount thereof with a demand for its payment. * * * If
the heirs of a deceased person * * * are jointly assessed,
service need be made on only one of them. * * * Demand
shall be made by the collector by mailing the same to the last
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6
court ruled that the subsequent taking of the prop-
erty was not invalid for lack of notice. Id. at Al0.
Second, the court rejected as untimely a challenge
to the validity of the commissioner's low value de-
termination pursuant to Section 79. Id. at A10-A11.
Third, the court affirmed the Land Court's ruling
that petitioners' challenge to the notice procedures
for the taking and sale is barred by Section 80C. Id.
at All.
8. On April 24, 1995, the Supreme Judicial Court
of Massachusetts declined to grant further appellate
review. Pet. App. Al.
ARGUMENT
1. Petitioners' factual and legal arguments re-
garding lack of notice are without merit.
a. Petitioners rely on this Court's decision in
Mennonite Board of Missions v. Adams', 462 U.S. 791
(1983), to argue that the Town's failure to give "actual
notice" of the taking of the property in 1936 or of the
tax sale of the property in 1941 violated due process
and voids both the taking and the sale. Pet. 12-17 &
n.9. In Mennonite, the Court held that, to satisfy the
Due Process Clause, a county must take reasonable
steps to provide a mortgagee with actual notice of a
proceeding to sell mortgaged property for nonpay-
ment of taxes, so long as the mortgagee's name and
address are reasonably ascertainable. 462 U.S. at 798-
800. The county officials in that case failed to meet
the minimum procedural due process requirements,
since the officials, in compliance with the State of
Indiana's tax foreclosure laws, merely posted notice
___________________(footnotes)
or usual place of business or abode, or to the address best
known to him.
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7
of the tax sale at the county courthouse and published
a newspaper notice of the same. Id. at 792-794. NO
notice had been mailed to or served on the petitioner,
the mortgagee, despite the fact that the mortgagee
was easily identified through the publicly recorded
mortgage. Id. at 798.
The mortgagee in Mennonite not only had no
knowledge of the tax sale proceedings, it did not even
know that the mortgagor had been delinquent and had
failed to pay real estate taxes on the property. 462
U.S. at 792. In the instant ease, on the other hand,
the state trial and appellate courts each concluded, as
a factual matter, that a demand for nonpayment of
taxes had been personally served, at least by mail, on
one or more of the devisees in April, 1936. Pet. App.
A7-A8, A15-A16. The state trial and appellate courts
then ruled that actual notice of the demand for non-
payment placed the devisees on constitutionally suffi-
cient notice that a taking would ensue if their de-
linquency continued, id. at Al0, A16, a conclusion
that is fully consistent with this Court's holding in
Mennonite.
The Mennonite Court stated in dictum that "a
mortgagee's knowledge of delinquency in the payment
of taxes is not equivalent to notice that a tax sale is
pending." 462 U.S. at 800. However, knowledge of
that type would have significance to the owner of
property different from its significance to the mort-
gagee. The owner has a more direct interest in the
property than the mortgagee, cf. id. at 799 (noting
that publication and posting are especially ineffective
for reaching mortgagees "who, although they have an
interest in the property, do not make special efforts to
keep abreast of such notices"), and only the owner
would have direct knowledge of whether the de-
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8
linquency continued unabated. Unless a mortgagee
learns otherwise, a mortgagee might naturally as-
sume that the property owner would satisfy the tax
debt in a timely fashion. An owner, however, can rea-
sonably be charged with notice of the legal conse-
quences that are likely to follow once the owner has
actual notice of a delinquency.
b. Petitioners urge an expansive reading of Men-
nonite, under which a demand for nonpayment of tax-
es personally served on the owner of property is in-
sufficient notice that a tax taking might ensue. This
case, however, does not appropriately raise that issue
because it involves a contested factual record con-
cerning events occurring more than 60 years ago.
Mennonite involved a mortgagee that acted promptly
to vindicate its rights. The tax taking in Mennonite
occurred in 1977; the two-year redemption period for
the mortgaged property ended on August 8, 1979. See
462 U.S. at 794. The mortgagee learned of the tax
foreclosure eight days later on August 16, 1979. Ibid.
When an action to quiet title was brought against the
mortgagee in November, 1979, the mortgagee was
available to attest to the fact that it had no knowledge
of the tax sale prior to August 16, 1979, which was the
basis for its due process challenge.
In the instant case, however, petitioners waited
nearly 50 years to commence their challenge to the
1941 tax sale. The devisees, the owners of the prop-
erty during the relevant time period (1936-1941), are
no longer alive, 7 and thus cannot testify as to their
knowledge at that time. Nothing in the record in this
case, other than the fact that the $40.04 real estate
___________________(footnotes)
7 Petitioners describe themselves as the "heirs at law" of the
devisees. See Pet. 4.
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tax was never paid, indicates whether any of the
devisees became aware of the publicly posted and
published notices of the 1936 tax taking or the 1941
tax sale. If one of the devisees did have such knowl-
edge but failed to act on it, there would be no pro-
cedural due process violation, even if the devisees
were not personally served with notice.
c. Petitioners argue that certiorari should be
granted "to resolve a direct conflict between federal
and state jurisprudence concerning the constitu-
tionality of the statutory notice provisions pertain-
ing to [low value] tax sales conducted under [Mass.
Gen. L. ch. 60, 79 (1941)]." Pet. 10. Petitioners cite
Guaranty Mortgage Corp. v. Town of Burlington, 432
N.E.2d 480 (Mass. 1982), a case decided prior to this
Court's decision in Mennonite, as the source of the
conflict. Guaranty Mortgage rejected a procedural
due process challenge to Section 79, which allows
notice by publication for tax sales of low value
property. Id. at 485-486.
Guaranty Mortgage does not pose a "direct con-
flict" with Mennonite. To the extent that Guaranty
Mortgage held that notice by publication of a tax sale
is sufficient to protect the interests of mortgagees,
that aspect of the case appears to have been over-
ruled by Mennonite. To the extent that Guaranty
Mortgage held that publication by notice is sufficient
for owners of property who have already received
personal notice by mail of their tax delinquency, that
holding poses no necessary conflict with Mennonite.
There is also no conflict for this Court to resolve
because the Massachusetts Supreme Judicial Court
has acknowledged in dictum that Mennonite may
require reconsideration of certain aspects of Guar-
anty Mortgage, should the appropriate case arise.
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10
See Christian v. Mooney, 511 N.E.2d 587, 592 n.10
(Mass. 1987) (noting that Mennonite casts "some
doubt at least on the reasoning in Guaranty
Mortgage"), cert. denied, 484 U.S. 1053 (1988); see also
Lamontagne v. Knightly, 572 N.E.2d 1375, 1379-1380
(Mass. App. Ct. 1991) (discussing the extent to which
Christian indicated that Guaranty Mortgage has
been overruled by Mennonite). Unless the Massa-
chusetts courts, having had a full opportunity to
revisit the notice procedures in Section 79 tax sales,
issue a post-Mennonite decision in conflict with that
case, any intervention by this Court to resolve an
alleged conflict would be premature.
2. Section 80C of chapter 60 of the Massachusetts
General Laws, enacted in 1986, provides a 20-year
period from the time a tax title is recorded for making
a challenge to a taking or conveyance of property
utilizing "low value" procedures (Mass. Gen. L. ch.
60, 79 (1941)) based on deficiencies in notice. Peti-
tioners waited more than 48 years after the tax title
was recorded in 1941, and nearly four years after the
enactment of Section 80C in 1986, to bring their
claim. The state trial and appellate courts correctly
ruled that petitioners' claim was time-barred. Pet.
App. A11-A12, A17-A18.
Petitioners assert (Pet. 17-20) that constitutional
defects in procedures, "including defects based on
want of legally mandated notice" (Pet. 18), cannot be
rectified by a purely retroactive, curative statute,
unless the statute provides for a "reasonable time"
after its enactment "within which any party affected
could assert his rights." Saranac Land & Timber
Co. v. Comptroller of New York, 177 U.S. 318, 330
(1900). Cf. id. at 324 (holding that six months is a
reasonable period for interested parties to assert
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11
their rights following the enactment of a statute
quieting title to certain deeds that were sold for
nonpayment of taxes); Texaco, Inc. v. Short, 454 U.S.
516, 532-533 (1982) (upholding a state statute that
automatically extinguished mineral interests that
had not been used for 20 years, without any notice to
owners, because the statute included a two-year grace
period, which "afford[ed] the citizenry a reasonable
opportunity to familiarize itself with its terms and
comply").
Section 80C does not expressly provide for a grace
period during which interested parties could bring
claims against tax titles that were recorded more
than 20 years prior to July 21, 1986, the effective date
of the statute. If a claim contesting a tax title had
been brought within a reasonable time after July,
1986, a state court might have construed the stat-
ute to allow such a grace period in order to save
the statute from constitutional attack. Petitioners,
however, raised their procedural due process claim
for the first time in June, 1993, nearly seven years
after the enactment of Section 80C. See Pet. 7.
Because of the tardiness of their claim, petitioners
are in no position to complain about the absence of a
reasonable grace period.
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12
CONCLUSION
The petition for a writ of certiorari should be
denied.
Respectfully submitted.
DREW S. Days, III
Solicitor General
WILLIAM F. KROENER, III
General Counsel
JACK D. SMITH
Deputy General Counsel
ANN S. DUROSS
Assistant General Counsel
RICHARD J. OSTERMAN
E. WHITNEY DRAKE
Counsel
Federal Deposit Insurance
Corporation
SEPTEMBER 1995